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Section 1 The Construction Industry

Section 2 Make up of Firms

Section 3 Construction Activity

Section 4 Roles in Construction

Section 5 Economics of the Industry                                           


Description: This unit Introduces the role and structure of the UK Construction Industry and provide an understanding of the nature and importance to which extent the construction industry impacts on the UK economy. It will also outline the roles of the professions and skills found within the industry.

Author: Gates MacBain Associates

Section 1  The Construction Industry

Aims and Objectives

At the end of this section you should be able to: 
  • Discuss the size and structure of the UK construction industry
  • Compare the UK construction industry in size and output to a selection of other countries
  • Consider the make-up of firms within the Industry

The Construction Industry is involved in the activity of the construction of buildings or civil engineering projects and the maintenance and repair of existing structures.  

The UK construction industry in the UK employs over 2 million people working for over 250,000 firms. This number does not just relate to those involved in the physical aspects of construction but also the professional people involved with design and also the firms producing the materials and products used.  

With the second largest output in the European Union, the UK Construction Industry contributes 8.2% of the nations Gross Value Added (GVA), which measures the contribution to the economy of each individual producer, industry or sector.  

A report by the Department of Trade and Industry (DTI) published in 2004 looks at the profile of the UK Construction Industry and compares it to France, Germany and the USA and provides a good indication of the size and output. The Report can be found by using the link below. From this report it can be seen that 56 per cent of the UKs output relates to non-residential work while non-residential output in France, Germany and the US amounts to approx 33 per cent. Conversely, residential development in UK is approx 26 per cent compared to France, Germany and US of 33 percent. However, we will need to be aware that these statistics do fluctuate according to the economic situation within the country.  

Other factors must also be considered, for France, which has a larger land mass compared to its population, has a greater output in civil engineering as it requires more roads and infrastructure; consequently its output on this is 36 per cent while UK output is 18 per cent. 

Many factors need also to be considered with regard to individual countries and the construction that is occurring within them. China is emerging as an industrial nation and a great deal of construction has and is being carried out there.  It is estimated that in 2007 50% of all concrete and 33% of all steel being used in the world was in China. A view on China’s Construction Industry can be obtained from the book Building Procurement listed below. The United Emirates is another country that has undergone significant development in recent years due to its oil wealth. Economic factors relating to the demand for construction has a major influence on the construction industry and employment generally.



  • Morton, R. (2008) Construction UK. 2nd Ed Oxford: Blackwell (Chapter 3)
  • Cooke, B & Williams, P (2009) Construction planning, programming and control 3rd Edn. Wiley-Blackwell: Oxford (Chapter 1)

Section 2  Make up of Firms

Aims and Objectives

At the end of this section you will be able to: 
  • Summarise the structure of the UK Construction Industry.

Although there are a great many small firms in the construction industry, it is the larger ones that employ the majority of the workforce and are responsible for the majority of the output.  The table below shows the relationship between size of firm and the employment and value of work. 
 Number of Firms EmployingValue of Work £millions
 Firms employing under 4 people 137,368 303,500 2,836
 Firms employing 1,200 and over 42 92,000 1,730


  • Morton, R. (2008) Construction UK. 2nd Ed Oxford: Blackwell (Chapter 3)

Self-Assessment Task

  • Summarise the structure of the UK Construction Industry.

Section 3 Construction Activity

Aims and Objectives

At the end of this section you should: 
  • Be able to discuss the work activities that are undertaken within the industry.

Construction activity can be placed in a number of categories, amongst these are:  
  • General construction and demolition
  • Construction repair and maintenance
  • Installation of fixtures and fittings (e.g. electrical, plumbing)
  • Building completion ( e.g. plastering, glazing and painting)
  • Civil Engineering

Alternatively they can be more broadly described or classified as:  
  • Residential (house building)
  • Non-residential 
  • Infrastructure

The type of work can range from individuals wanting an extension or a new dwelling designed and built or repair work, to the government wanting a new hospital, nuclear generating plant or motorway.  The work may be carried out either for the clients own use or for the use of some other individual or organisation, whilst some is speculative as in the case of a housing developer who builds dwellings without having purchasers at the time of starting construction. 

Although the majority of contracts are reasonably small they are significant in number and make up a large part of the overall output for the industry.  

One of the main areas of work within the industry is that of repair and maintenance, which for the private sector is around 40 per cent of output, the Public sector being the remaining 60 per cent. 

A detailed breakdown of the value of work carried out, the value of new orders by category and details of output and employment for the Construction Industry can be found on the Office of National Statistics web site is shown below.   

The most comprehensive source of information regarding statistics is produced by the Government Statistical Office and it publishes the Construction Statistics Annual Report, which can be accessed by clicking on the link below. The book Building organisation & procedures shown below should also be consulted. 



  • Foster, G (1999) Building organisation & procedures, Harlow, Longman (Chapter 1)

Section 4  Roles in Construction

Aims and Objectives

At the end of this section you should be able to: 
  • List and explain the main roles of people and organisations working within the construction industry both in a professional capacity and as a trades person on site.

In order for construction to take place, it requires the involvement of a number of parties. 


It is the client who drives the whole process of construction as they are the party who wants the building/project constructing. They commission the building and provide the finance either by using their own money or money from the banks or investors. 

The client can be classed as either
  • Public
  • Private

This relates to work carried out for:
  • The Government and its departments
  • Local Authorities
  • Individual
  • Companies
  • Institutions
  • Utility companies
  • Housing associations

The barriers between the two are becoming more blurred in that contractors and the government is now carrying out work in partnership under the Private Finance Initiative; this will be dealt with in a later module.

The requirement for new construction is influenced by a number of factors, these are affected by Government through its policies, which determine the availability, cost of finance and the state of the economy; we will look at this in the last section of this unit. 

Professionals in the Industry 

A number of professional specialists are needed in order for a building to be constructed the presentation below will provide an introduction to the roles that these people perform.

The main roles are listed in the PowerPoint Presentation although you should be able to add to the responsibilities listed to obtain a greater understanding of the work that they do and the relationship they have with each other. 

Construction Trades. Specialist firms employ trades people to carry out most of the actual construction work. The types of trades you are likely to come across are listed below though you should ensure that you understand the work that they carry out. 
  • Bricklayer 
  • Carpenter
  • Concrete finisher
  • Electrician
  • Glazier
  • Ground worker
  • Labourer
  • Painter and decorator
  • Plant operator
  • Plasterer
  • Plumber
  • Pipefitter
  • Roofer
  • Steel fixer
  • Steel erector
  • Welder
The need for skilled workers within the construction industry depends on the demand for its products and this will vary according to the economic climate.  

Key Organisations

Each of the professions and trades has its own organisation to promote, assist and govern its members

You should find out about the main ones and what they do.  Ones that you should be aware of are:
  • Professional Institutes
  • Employer and Employee Organisations
  • Government Sponsored Organisations 
  • Trade Unions
  • Trade Associations



  • Hackett, M Robinson,I & Statham, G, Eds, The Aqua Group Guide to Procurement, Tendering & Contract Administration, Oxford: Blackwell (Chapter 1)
  • Foster, G (1999) Building organisation & procedures, Harlow, Longman (Chapter 2)

Self-Assessment Task

  • Explain the types of careers that are open to people in the Construction Industry and their relationship to the construction process.
  • List the main trade and professional organisations and their role within the Construction Industry.

Section 5  Economics of the Industry

Aims and Objectives

At the end of this section you should be able to: 
  • Explain why the economy within the country affects the amount of work available to construction firms.

As mentioned previously, the demand for construction depends on a number of factors and the industry tends to be a barometer for the economy. If the economy is strong people will feel confident and secure in their work situation so they will be more willing to buy a new house.  It also means that they are willing to spend money on goods and this means that manufacturers need to produce more and that can result in them requiring bigger premises, which often involves extensions or new build. 

With a strong economy, there is greater employment, which provides the Government with more income from taxes and less expenditure in social security payments all of which means the Government has more money to spend on projects such as new infrastructure. 

A strong economy also has an effect on prices, which tend to rise when there is a lot of work and fall when work is in short supply.  This fall is due to firms having to be more competitive in their pricing in order to win contracts. You will look at supply, demand and price in the Management of Products, Finance and Cost Studies Module.  

A number of other factors need to be appreciated, these include:
  • Government Intervention – will legislation or policies make it more difficult or easier to carry out work, i.e. tax relief on investment projects may encourage firms to invest. Higher minimum wages or legislation to protect workers, could increase the cost of business, reduce profitability and result in cutbacks.
  • Alternative facilities available – could these be more cost effective i.e. adapt an existing building rather than construct a new one.
  • Availability of resources – are they likely to be difficult to obtain or increase in price
  • People’s perception about the future – do they think we are entering a recession or that house prices will rise or fall in the near future.
  • The exchange rate – will affect the cost of imported materials.
  • Inflation – high rates will discourage investment.
  • Interest rates – an increase will make it more expensive to borrow and affect profitability.

In order to maintain an understanding on the financial aspects relating to the construction industry it is necessary to keep up-to-date with news and events, watching the news on television and reading the papers is one way of doing this as is the reading of specialist magazines, some of which are available from college/university/public libraries.  However, some of these can be read on-line. 


Self-Assessment Task

  • Explain the way that the economy affects the amount of work in the Construction Industry. 

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